Ondo Finance Seeks SEC No-Action to Integrate Blockchain Into Securities Infrastructure

Ondo Finance is seeking SEC no-action relief for a model that integrates Ethereum into regulated securities, aiming to enable tokenized operational processes while preserving existing legal ownership and custody structures.

Key Takeaways:

Positioning the request as a limited operational step, Ondo Finance stressed that the approach does not change how products are structured. The company stated:

“We think this structure can make OGM products more useful without changing the basic legal framework that supports them.”

It further emphasized scope, stating: “It does not ask the SEC to rewrite securities law or approve every form of tokenized security. It asks for confirmation that SEC staff would not recommend enforcement action if we proceed with a specific model for recording and administering certain securities entitlements in tokenized form on Ethereum Mainnet in support of OGM products.” The request noted: “OGM products would remain what they are today: tokenized notes that provide non-U.S. investors with exposure to U.S.-listed stocks and ETFs.”

The filing describes three distinct layers that are kept separate. First, the offshore layer consists of OGM products, which are tokenized notes. These products are sold outside the United States. Second, the collateral layer includes U.S.-listed stocks and ETFs held through the Depository Trust Company system and recorded by Alpaca Securities. Third, the recordkeeping and control layer uses Ethereum Mainnet to support the reconciliation and administration of securities entitlements tied to that collateral.

Ondo explained:

“What changes is that, in a limited set of circumstances, the relevant securities entitlements would also be represented in tokenized form on Ethereum Mainnet and held by our custodian Bitgo to support recordkeeping and operational processes.”